I recently had a real estate transaction go south. What does that mean exactly? Simply put, my clients found a house they loved, their offer was accepted and they entered escrow. A few weeks into the transaction, issues came up about the property which made it clear that should my clients continue, their safety and that of their children, might be compromised. The contract was cancelled. I am sure I do not have to tell you what a disappointment that was, on many levels. But looking past the disappointment, it was a smart decision. The consequences of continuing could have been disastrous.

We never really know a house at first. Initially when we look at pictures, we are struck by the colors, the mood the pictures invoke. Have you ever looked online at a listing and thought the rooms would be huge, based on the photographs, only to visit the house in person and see how small the rooms actually are? The neighborhood might be amazing. The view! The house might have every amenity you have been searching for. Have you seen the Viking stove? But until you have inspected the home, from top to bottom and reviewed the disclosures, you do not know enough.

The house in question was beautiful. Freshly painted, newly carpeted. Cosmetic fixes that added to the property’s charm. Set against a beautiful hillside, the home had the requisite number of bedrooms my clients desired and was the only one on the road bathed in a patch of sunlight. The deck looked out onto a redwood forest. Perfect. And the price was right. A pest inspection had been performed prior to the home being listed for sale. The required fixes were costly, but not prohibitively so. Upon entering escrow, we immediately scheduled a general inspection. No need to repeat the pest inspection; a reputable company had performed it. My clients were all in.

The general inspector was fastidious in his assessment of the house. He was on his ladder checking the roof and the attic. He inspected the fencing, the siding, the foundation, everything. The home was built in 1920 on a hillside. The retaining wall at the rear of the house was found to have a crack in it; it was leaning. The inspector said it had failed. The definition of a retaining wall is “a structure that holds back soil from a building or structure…Retaining walls prevent down slope movement and provide support for…grade changes.” In layman’s terms it meant the hillside could potentially come down upon the house, destroying it or at least part of it. In this particular area of Sonoma County, we knew of several instances where this had actually happened.

At that point, we provided the report to the listing agents, discussed having a soils engineer and contractor come out to assess the retaining wall further and preliminarily alerted them to the fact that my clients either needed the wall rebuilt prior to close of escrow or required a concession to get the wall reconstructed. The sellers ultimately decided they did not have the funds to do either and my clients were unwilling to take a chance in the event the wall came tumbling down. So the contract was cancelled and the sellers put the house right back on the market.

Ask any Realtor – cancelling a transaction is something we hope to avoid at all costs. It doesn’t endear us to the agent on the other side of the transaction and often our clients take a few weeks to get back on track with us after a cancellation of escrow. There is the typical second guessing, especially in today’s Sonoma County housing market, where it has become so difficult to get an offer accepted in the first place. But at the end of the day, in this particular instance, when my clients’ safety and that of their family was in question, I know a cancellation was our only option and it was the right thing to do.